Tobacco manufacturer Philip Morris will be forced to pay millions of US dollars in legal fees to Australia after its failed case against plain packaging laws.
Big tobacco companies have fought vigorously against former Australian prime minister Julia Gillard’s government’s plain packaging laws since they were introduced in 2011.
By banning distinctive-colored cigarette packaging and logos, Australia’s laws went further than the advertising bans and graphic health warnings introduced in many other countries.
Philip Morris, Imperial Tobacco and Japan Tobacco quickly attempted to have the laws overturned through a constitutional challenge in the High Court of Australia, which they lost in 2012.
Philip Morris Asia then took a case to the Permanent Court of Arbitration (PCA) in The Hague in 2012. It tried to use the conditions of a 1993 trade agreement between Australia and Hong Kong to argue a ban on trademarks breached foreign investment provisions.
The corporate giant not only lost, but was criticized by the court, which found the case to be “an abuse of rights.”
The PCA published its decision over the weekend on the payment of costs, although the decision was made in March.
The decision found Philip Morris Asia liable to pay Australia’s claim for legal costs.
The final figure was kept secret, but Fairfax Media reported it as being up to A$50 million (US$38 million).
Australia successfully argued Philip Morris must pay its court fees and expenses, the cost of expert witnesses, travel and solicitors and counsel, as well as interest.
Australia told the court its claim was modest and was a small proportion of what the tobacco giant had sought in damages.
It said Philip Morris had sought to challenge a public health measure of critical importance to Australia, making it important to “mount a robust and comprehensive response to all aspects of the claim.”
Philip Morris had tried to argue the government’s costs were unreasonable for a “legal team that consisted primarily of public servants.”
The company argued that two similar countries, Canada and the US, had never claimed more than US$4.5 million and US$3 million respectively in costs and fees.
“The claimant emphasizes that, even excluding the fees of four outside counsel, the respondent’s government lawyers claim over [redacted] in fees, even though Australia itself pays them ‘very modest government salaries,’” the PCA decision read.
The court found Australia’s claim was reasonable.
“Taking into account the complexity of issues of domestic and international law relevant in this procedure, particularly for a government team usually not engaged in such disputes, the tribunal does not consider that any of these costs claimed by the respondent were unreasonable and should not have been incurred,” it said.
“In making this assessment, the tribunal also takes into consideration the significant stakes involved in this dispute in respect of Australia’s economic, legal and political framework and in particular the relevance of the outcome in respect of Australia’s policies in matters of public health,” it said.
Earlier this year, big tobacco failed in a separate bid to have the laws overturned by the WTO. The decision was widely seen as a green light for more countries to follow Australia’s lead.
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